The Treasury has asked for public submissions on five proposals that would make changes to the consumer guarantees regime in the Australian Consumer Law (Schedule 2 to the Competition and Consumer Act 2010). The proposals are based on a wide-ranging review of the Australian Consumer Law
that was undertaken by Consumer Affairs Australia and New Zealand (“the CAANZ Review”). For more information on the background to the review, and
the CAANZ Final Report, see TimeBase’s earlier article.

The Treasury has now released a Consultation Regulation Impact Statement (“the Consultation
RIS”) that covers the five proposals. According to the Statement:

“A Consultation RIS presumes that there may be scope for the Government to take action
to address an identified problem. The purpose of the Consultation RIS, therefore,
is ‘to canvass the regulatory options under consideration, in order to determine the
relative costs and benefits of those options.’”

Public submissions on the Consultation RIS close on 9 March 2018.

Increasing the threshold in the definition of ‘consumer’

Chapter 1 of the Consultation RIS deals with increasing the threshold at which a buyer
is considered to be a “consumer” of goods. Currently, there is a threshold applied
so that a buyer is a consumer if the purchase price does not exceed $40,000. This
threshold has not changed since 1986, when it was introduced. The CAANZ Review proposed
an increase of the threshold to $100,000. The Consultation RIS outlines three options:
maintaining the status quo, increasing the threshold to $100,000 or increasing the
threshold to $100,000 and applying indexation.

Clarifying the consumer guarantees regarding failure within a short period of time

Chapter 2 deals with the clarification of some of the consumer guarantees under the
Act. Currently, there is a distinction between “major failures”, which result in
the consumer having the right to reject the goods and choose a remedy, including a
refund and “non-major failures”, which result in the supplier choosing a remedy.
The CAANZ Review found there was uncertainty about how this distinction should be
applied. The Consultation RIS suggests 3 options:

Maintain the status quo;

Specify a short period of time during which a consumer is entitled to a refund or
replacement without needing to prove a major failure. The proposed period is 30 days;

Option 2, but specify a different time period for high value goods, such as motor
vehicles and white goods, based on a monetary threshold, during which a consumer is
entitled to a refund or replacement without needing to prove a major failure. (Within
Option 3, there is consideration of two approaches: A longer period of time for high
value goods and an exemption (status quo) for high value goods.)

Clarifying the consumer guarantees regarding multiple failures

Chapter 2 also deals with uncertainty about whether multiple non-major failures should
be considered collectively as a major failure. The Consultation RIS again suggests
three options: maintaining the status quo; explicitly outlining that multiple non-major
failures can amount to a major failure; or more explicitly specifying a number of
non-major failures that would amount to a major failure.

Enhancing disclosure for extended warranties

The CAANZ Review recommended more clarification around extended warranties, in order
to aid consumers in determining if they provided extra protection outside the Australian
Consumer Law. Chapter 3 canvasses options including maintaining the status quo; a
legislative amendment comprising a cooling-off right, oral disclosure and written
disclosure; and oral and written disclosure with an opt-in process.

Modernisation of consumer guarantees for goods sold at auctions

The CAANZ Review proposed modernizing the currently “sale by auction” exemptions from
the consumer guarantees, on the basis that online auctions do not allow consumers
to inspect goods and identify defects prior to purchase in the same way that traditional
auctions do. Chapter 4 sets out four possible options:

Maintain the status quo;

Goods purchased through online auctions that are conducted entirely online, with no
reasonable opportunity to inspect goods, receive access to the remainder of the consumer
guarantees (that are available in the ACL for generic retail sales). The status quo
remains if the auctioneer makes the goods reasonably available for inspection;

Goods purchased through online auctions, regardless of the ability for a prior inspection
(including traditional auctions that allow online bidding) receive access to the remainder
of consumer guarantees (that are available in the ACL for generic retail sales). The
status quo will remain for consumers who purchase from auctions in person; and

All goods purchased through auctions will receive access to the remainder of consumer
guarantees (that are available in the ACL for generic retail sales).

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